It’s a constant struggle — terrifically amplified in online auctions — to decide if we as an auctioneer (and seller) allow any certain bidder to register and bid. We set criteria (must have driver’s license, must sign, etc.), and then inevitably a high bidder essentially disappears.
It’s about in effect drawing a line — those who cross the line can bid, and those who don’t can’t. Yet, where do we as auctioneers draw that line? Draw it too far one way, and we miss out on qualified bidders and draw it too far the other way and we allow bidders with disingenuous intentions to bid.
As an auctioneer, our goal should be to maximize the number of bidders (endeavoring to maximize the high bid) while minimizing the risk that the high bidder won’t perform. Is there a certain place this line is to be drawn? High bids are largely only valuable if those high bidders pay.
Of course, what if a bidder who isn’t the high bidder has disingenuous intent? The answer is, “We may never know …” as only the high bidder is obligated to perform. Yet, there are potential legal issues if the high bidder discovers other [under-] bidders had no way (or intent) to perform.
Two egregious decisions I see are these: Not adjusting registration criteria for future auctions based upon past experiences, and over-compensating for past experiences. Concerning the latter, for example, we are privy to an auctioneer who received one bad personal check three years ago and now won’t allow checks at any auctions …
Further, the absolutely worst policy is having arbitrary, capricious, inconsistent registration criteria as we have written about several times including most notably here: https://mikebrandlyauctioneer.wordpress.com/2020/10/02/terms-conditions-fairness/.
Some auction software provides ratings based upon fellow auctioneers’ experiences. We’re not convinced this is the best way to decide to allow — or not allow — any bidder to participate. We wrote more about that here: https://mikebrandlyauctioneer.wordpress.com/2020/01/17/banning-your-or-their-past-bidder/.
Nobody is entitled to bid at an auction outside of forced sales — it’s a privilege generally which is then is codified as a right once the terms are set. Auctioneers can indeed limit who bids at their auctions, so long as there is coordination with the client(s) involved and other important issues are considered. We wrote prior about these material issues here: https://mikebrandlyauctioneer.wordpress.com/2013/03/18/only-certain-bidders/ and this privilege vs. right issue here: https://mikebrandlyauctioneer.wordpress.com/2017/01/17/is-bidding-at-auction-a-privilege-or-right/.
There is no certain answer for who to allow to bid and who to not allow. Auctioneers should discuss with their sellers and then decide what level of risk/reward “the team” is comfortable with … understanding that a bid of $1,000,000 from someone paying and closing is likely far better than a bid of $1,100,000 from someone who’s doing neither.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services, and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.
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